The Bank of England has told banks to do more to bolster their reserves, warning that lenders’ balance sheets are not yet at the levels required to weather another financial crisis.

Sir Jon Cunliffe, the Bank’s deputy governor for financial stability, said new requirements being introduced by regulators in order to end the “too big to fail” phenomenon were necessary despite claims they would reduce the amount banks are able to lend.

In a speech in London, he said current requirements on risk-weighted capital – the reserves a bank is required to hold weighted against how safe they are – went only some way to make banks safer, especially at a time of rising asset prices. Fears have arisen that in the era of quantitative easing and low interest rates, asset prices have been inflated, meaning capital appears less risky than it is. Sir Jon said risk weighting models can be inaccurate.

“[T]he evidence of the crisis is that this risk can become more pronounced in boom times when asset prices are rising and the pressure to expand balance sheets with cheap funding is greatest,” Sir Jon said. “The result is dangerous concentrations in what appear to be low-risk assets.

Regulators across the UK, Europe and the US are developing rules aimed at preventing a repeat of the enormous government bail-outs to lenders such as 2008's £66bn rescue of Royal Bank of Scotland and Lloyds Banking Group. The companies, which accounted for 40pc of UK lending, were deemed too important to be allowed to fail.

One rule being prepared by regulators is an international standard on leverage ratios – how much loan exposure banks have in proportion to how much non-risk-weighted capital they hold – which Sir Jon said would have reined in some irresponsible activity before the crisis.

“If a minimum leverage standard been in place prior to the crisis, it would have bound more tightly than risk-weighted measures for a number of banks that met their risk weighted capital ratios but that subsequently failed,” he said.

“Concerns have been raised by some in the industry that taken together, the main elements of the new capital and liquidity regime can interact to have potentially serious and unwelcome unintended consequences, particularly on market liquidity,” he said.

“We should not however set the objective of ensuring a return to pre-crisis liquidity conditions. Liquidity premia were likely too low with liquidity risk very probably under-priced before the crisis. Market participants will need to recognise this change in market structure and adjust their balance sheets accordingly."